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Pricing Decisions in the Euro AreaHow Firms Set Prices and Why$
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Silvia Fabiani, Claire Suzanne Loupias, Fernando Manuel Monteiro Martins, and Roberto Sabbatini

Print publication date: 2007

Print ISBN-13: 9780195309287

Published to Oxford Scholarship Online: September 2007

DOI: 10.1093/acprof:oso/9780195309287.001.0001

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How Portuguese Firms Set Their Prices

How Portuguese Firms Set Their Prices

Evidence from Survey Data

(p.152) 10 How Portuguese Firms Set Their Prices
Pricing Decisions in the Euro Area

Fernando Martins

Oxford University Press

In this chapter, price stickiness in Portugal is analyzed on the basis of qualitative data coming from a survey conducted by the Banco de Portugal. The main conclusions are the following. First, there is a considerable degree of price stickiness: most firms do not review or change their prices more than once a year, while time lags in price adjustments after shocks were found to be significant. Second, prices seem to go down more frequently than what is normally assumed: slightly more than 30 percent of total price changes are price decreases. Finally, customers' preference for stable prices, which take the form of implicit contracts, is apparently the main reason for the stickiness observed in prices

Keywords:   Price stickiness, Portugal, survey data, implicit contracts

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